In an important but too often overlooked essay entitled 'Intellectual Property Institutions and Panda's Thumbs' economist Paul David likened intellectual property arrangements to the thumb of the Giant Panda. The "thumb" is not a digit at all but an enlarged sesamoid bone which does enable panda’s to grasp but is mechanically limited and inefficient. David explains that copyright and patent are not carefully calibrated mechanisms for encouraging innovation in modern economies but as ill-suited contraptions. Patents and copyright have been developed from the privilegi granted by mercantilist cities in Renaissance Italy, and letters-patent wielded in patronage politics by putative absolute monarchs. The result David notes is that copyright and patent are “a mixture of the intended and unintended consequences of an undirected historical process on which the the varied interests of many parties, acting at different points (some widely separated in time and space) have left an enduring mark.”

Contemporary discourse on the "Knowledge Economy" often suggests that patent and copyright are unquestioningly appropriate amongst Moore’s Law, network effects, cDNA and nanobots. Its worth asking though whether they make any more sense than African lawyers sweltering in black robes, suits and ties in stifling (non air conditioned) court rooms.

I'd never heard of the Paul David essay, so I looked it up and you can download a copy online (unfortunately, it's a Microsoft Word doc). It's a worthwhile read:

In short, with regard to the major structural features of the institutions of
intellectual property protection, one might as well accept that modern economic
analysis offers little basis for resisting the conclusion that the industrial societies of
the West remain "prisoners" of our particular history. It is all too easy to miss that
main message by allowing oneself to be carried away with the style of intricate
economic analysis characteristic of the modern literature devoted to the problem of
the optimum length and scope of patent protection, or the optimum degree to which
copyright should be enforced; and especially with the efforts to be more conclusive,
and construct "positive" theories exposing the economic rationales of this or that
particular aspect of present-day legal institutions. By focusing selectively upon
specific and arresting features of the structure of protections afforded to intellectual
property, and pointing to their putatively favorable consequences for social efficiency
in resource allocation, a misleading impression can be conveyed that the law in this
area is susceptible to easy and rapid reshaping for the purposes of enhancing
economic welfare.

The paper goes into the history of patent laws, and how they were initially driven for a very different purpose -- mainly for certain countries to get access to the knowledge of other countries. That is, they would entice people with knowledge of certain industries in other countries to move, and in exchange they'd give them a monopoly. It also explains that the whole claim that early patents were about "disclosing" ideas is a "social contrivance" by modern patent system supporters -- not realizing any of the early efforts at "disclosure" were solely for countries to get inventions from other countries "disclosed" so local industries could be built up. But the key point is that our modern patent system is really just a continuation and modification of those earlier systems, with the claims that it's about encouraging innovation also being a later whitewashing of history to make them acceptable in modern society. The lack of any economic evidence that these laws actually encourage innovation is pretty problematic for patent system supporters.

Both the blog post above and the original paper it's based on are excellent reads.

Of course, when you then put it into context with this other article, by Stefan Larsson noting that copyright suffers from a path dependency, wherein historical choices lock us into future paths, it makes things even clearer. Choices made hundreds of years ago for very different reasons have more or less "locked" us into today's laws, even though nearly all of the economic research refutes the idea that either of the laws as put in place today function to serve the official purposes behind them. Yet, all of the legacy infrastructure built up around them -- and the massive industries that benefit greatly from the laws -- means that getting out of that path dependency is seen as a non-starter to many, despite the massive social and economic costs.

Reader Comments

>Contemporary discourse on the "Knowledge Economy" often suggests that patent and copyright are unquestioningly appropriate amongst Moore’s Law

No, Moore's Law is a perfect example of why patents are wrong: Their term is far, far too long (assuming they should be granted at all). 14-20 modern years are like 250 old years. During the lifetime of the LZW patents covering the downright simplistic ideas used in GIF compression, we went from dial-in BBSes (1981) to the rise and fall of untold numbers of Internet technologies and web empires (2003)

Re: Anachronism is the word

They won't last the decade, let alone another century.

I'd love to believe you - unfortunately we've just had, in the AV referendum, a graphics demonstration of how easy it is for stupidity to triumph when backed by a significant fraction of the the MSM - so I'm a bit depressed about the future right now..

Re: Re: Anachronism is the word

Everyone says you need copyright to survive, and business has 100% copyright that makes it profitable, but you can't show exactly how that copyright actually works.

It doesn't make a business decision.
It doesn't allow you to see where you can make money.

Rather, it seems to put blinders on people in how they can profit in the 20th century.

If you give your copyright to a publisher, you get $500 extra. Your right to profit has just been usurped for cash value now. This is still ingrained in people to this day.

It's so much easier to allow others to handle aspects of your business. Allow an editor to look over your mistakes. Allow a corporation with 120 years of experience to handle your business to focus on what you do best.

But the market is changing. You don't have to do that now. Copyright seems to be a limiter on what you can do. Sure, you can still hire an editor, but do you have to give away a copyright license to do so?

Do you have to give away your music licenses to a large corporation? How about DJing?

How about the ways you make games? The Valve community has just released a torrent of new content with the Saxxy awards. The characters are Valve's, but the youtube channels with people making replays of their best techniques are respectfully the people's. Copyright doesn't begin to explain how people are both content consumers and creators. There's a fine blur. But it's there.

I'm sure no politician can understand this. But hey, it's good to see that copyright may be going out the door as it's no longer needed.

Perfectly Simple Fix

Patent law is easy to fix. All the bad stuff coming from patents is a consequence of the concept of patent infringement. Get rid of it. Repeal that part of the law. Patents should be there to be used, by having the ideas in them widely adopted. At present, patents are quite useless to engineers. Here, the term "engineer" means anybody developing any new product or service. In any sensible company, engineers are absolutely forbidden to read patents, other than their own. This is because of the crazy "willful infringement" doctrine. Patents are actually only read by lawyers. They are written for and by lawyers in lawyer-speak, incomprehensible to engineers. That is why patents are presently useless.

When infringement is gone, patents become a method for inventors to claim inventor status and explain a kind of first draft of their invention. If the invention is truly novel and non-obvious then commercial implementors will pay the inventors a consulting fee to help get the invention into a product. First-mover advantage is important. The patent office should be running a wiki where technologies get explained, with links to patents (and the inventors). Now that would really "promote the progress".

Re: Perfectly Simple Fix

Not Anachronistic, Just Bad

I take issue with calling them anachronisms, being somewhat of a traditionalist myself. In fact having the copyright laws of many years past would be much more tolerable compared to the greatly expanded, modern copyright laws we have today.

Could the same not be said of most areas of law? I would guess that there's a load of legacy nonsense in contract, insurance, drug, housing, health law too.

I agree with what you're saying and think that these things should be reconsidered with an open mind (free from existing ideas) but the legacy thing isn't actually an argument either way for the usefulness or effectiveness of the laws today. It's just a statement that the laws don't serve their original purpose.

Re:

I agree with Alex. Almost all laws are anachronisms. For that matter, most societal traditions are the same way. So, like Alex said, this in and of itself isn't much of an argument against IP laws specifically.

I don't quite agree that copyright is "no longer needed." I think it ultimately boils down to the question of individual rights, actually. My political views are very liberal, but fundamentally I do think that people are entitled to the fruits of their labor. When people (like me) say we should raise taxes to fund programs that benefit society, it's with that understand in mind: yes, you might work hard for your wages, but some portion of them must go back to society to keep it running smoothly.

To say that copyright is completely pointless is basically saying that while the creator is entitled to do what they please with their work, it should also go to the rest of society to their benefit. I find it interesting that so many people think this should be the default position, whereas most (if not all) of us, even people on the far left like myself, would raise an eyebrow at anyone saying the 'default' tax rate is 100%, and we should make arguments to make it lower. Not the best comparison, but hopefully you get the idea.

The big failure of copyright/patent is when corporations get involved (much like anything else.) I don't think it's unreasonable for a songwriter to have a say in how their song gets used. I would prefer, for example, to say "no" if the Westboro Baptist Church wants to use my music for a video. This is (IMO) why copyright is good. They can't just take my song and set it to a video filled with disgusting messages and hate speech. On the other hand, it would seem very unreasonable for a pharmaceutical company to monopolize patents on certain life-saving drugs and charge an arm and a leg for them.

In short, I wish we could look at these different situations and think about how we can take a scalpel to IP law, rather than say that it is obsolete, pointless, and should be abolished completely. Nobody wants situation #2 to happen, and it's a tragedy when it goes. Nobody wants to see grandmas get sued by the RIAA. But I personally believe we can work toward a system that disallows this, while allowing for situations like a songwriter saying "no" to a hate group that wants to use their music to promote themselves.

On the appropriateness of "Anachronistic"

Patents are anachronistic as a tool of government intervention in much the same way that dunking would be an anachronistic punishment for filesharing.

A 20 year blanket monopoly on all use of a particular invention, where "invention" is quite broadly defined, with no attempt to judge the social value of granting such a monopoly or the appropriate monopoly term to grant in each case. These are simply not modern tools.

Right before the supreme court handed down the Bilski decision, Eben Moglen gave a speech summarizing the historical reasons for patent law and explaining how patents, as an instrument of government intervention in the economy, are lacking any of the modern structures and controls we expect, like a process for weighing the costs and benefits of such an intervention.

It's certainly true that our patent system needs updating -- for instance, the traditional, one-size-fits-all patent with the same terms and types of protection for widely varying inventions no longer makes too much sense, and it may be time to start discussing a multi-tiered patent system that allows for more flexibility. But that doesn't mean that the patent system is completely worthless and should be discarded altogether.